XOM's Upstream Advantage: The Growth Story Investors Shouldn't Ignore

Exxon Mobil Corporation XOM is among the largest integrated energy companies, but generates the majority of its earnings from upstream operations. The energy giant has a strong presence in the Permian, the most prolific oil and gas resource in the United States, and offshore Guyana. Thus, XOM’s upstream business outlook seems bright.

On the third-quarter earnings call, ExxonMobil stated that it has generated another record production of 1.7 million oil-equivalent barrels per day. Following its strategic push on broadening its presence in advantageous assets, XOM also mentioned its acquisition of more than 80,000 premium acres in the Midland, a sub-basin of the broader Permian, from Sinochem Petroleum.

ExxonMobil also highlighted that it has achieved record production of more than 700,000 barrels per day from Guyana. Notably, ongoing operations in advantageous assets like Permian and Guyana seem profitable since breakeven costs are low. Therefore, XOM can manage the business environment even when oil prices fall.

FANG & COP Also Have Footprint in the Permian

Diamondback Energy Inc. FANG and ConocoPhillips COP also have a strong presence in the Permian. FANG is a Permian pure-play player with sufficient drilling inventory to sustain its production for more than 10 years.

ConocoPhillips’ assets in the Lower 48 comprise resources in the prolific Delaware and Midland basins. The Delaware Basin contributes considerably to COP’s Lower 48 production. Thus, both FANG and COP can sail through low oil prices.

XOM’s Price Performance, Valuation & Estimates

Shares of XOM have gained 2% over the past year compared with the 6.8% improvement of the composite stocks belonging to the industry.

From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.53X. This is above the broader industry average of 4.82X.

The Zacks Consensus Estimate for XOM’s 2025 earnings has seen no revisions over the past seven days.

ExxonMobil currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research